ST. PAUL, Minn. (Legal Newsline) - Two lawsuits have been filed by Minnesota Attorney General Lori Swanson against out-of-state mortgage modification companies, alleging violations of a 2009 mortgage modification state law.
The lawsuit name American Modification Consultants LLC of Philadelphia, doing business as American Mitigation Consultants, and INQB8 LLC of Scottsdale, Arizona, doing business as Discount Mortgage Relief.
The two lawsuits are the first filed under the new law, which prohibits companies from offering to negotiate or modify the terms or conditions of an existing home mortgage from requesting advance payments from homeowners.
The law was drafted in an effort to combat the problem of mortgage modification companies that took advance payments from homeowners before disappearing, going out of business or not delivering services as promised, Swanson said.
"Homeowners who contact their lenders to modify their mortgages often face unreturned phone calls, lost paperwork, and other red tape," Swanson said.
"This and the bad economy have created an opening for mortgage modification companies to swoop in and take advantage of people."
American Mitigation Consultants and Discount Mortgage Relief are alleged to have charged homeowners advance fees for its services and then failed to deliver on the services. Homeowners were charge as much as $1,250 by American Mitigation Consultants. Advance fees of as much as $3,000 were charged by Discount Mortgage Relief, Swanson says.
"No homeowner should pay advance fees to companies for assistance in modifying the interest rate or terms of their mortgage," Swanson said.
American Mitigation Consultants was also alleged to have sent Minnesota consumers marketing solicitations that stated they may be entitled to special modification programs as a result of the federal economic stimulus act.